Best Blogs of the Week #270
Happy July 4th week. So many blog posts; we focused on two with a particularly keen interest on the first post and the topic of portfolio construction.
BlackRock – Putting risk on a budget – We generally see two different approaches to portfolio construction aimed at improving the experience of the markets: 1) Achieve a return similar to your benchmark but with less total risk, or 2) generate a higher return than the benchmark, but at the same risk level. Refer to the chart below. Of the first set, only 35% of the portfolios we surveyed met the stated risk goal; in the second set, 53% met their risk target.
Janus Henderson – Meet the Newest Measure of Manager Performance: Phi – The report finds that Phi, which attempts to quantify the combined motivational forces of purpose, habits and incentives of investment professionals, has a positive correlation to performance.
